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28 May, 09:34

Assume that a "leader country" has real GDP per capita of $50,000, whereas a "follower country" has real GDP per capita of $25,000. Next suppose that the growth of real GDP per capita falls to zero percent in the leader country and rises to 5 percent in the follower country.?

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  1. 28 May, 10:59
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    14 years

    Explanation:

    Given:

    Leader country GDP = $50,000

    Follower country GDP = $25,000

    Growth rate of follower country = 5%

    It is given that growth rate of leader country is "0" So real GDP will be $50,000.

    Follower country GDP is half.

    So, according to double match formula

    Number of years to double = 70 years / rate of growth

    Number of years to double = 70 years / 5%

    Number of years to double = 14 year

    So, In 14 years follower country will catch the GDP of Leader country.
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